Indices feel around for support as quad witching muddies the water
Friday's quad witching (of options expiration) made it difficult to confirm the significance of the day's trading action. Some indices continue to work with areas of support - I think - are valid. Others, not so.
The Nasdaq tagged support with a candlestick which is not typically associated with a reversal - a more neutral 'spinning top' - that leaves things open for Monday. However, technicals are net bearish which guides in favor of bears and further losses.
The S&P made a clean cut of what I had defined as possible support but didn't even stop to pause on the way down. It is now looking at support of its 50-day MA but as with the Nasdaq, the candlestick is again, not one associated with reversal. Technicals are not net bearish, but there are 'sell' triggers in the MACD, On-Balance-Volume and ADX. However, the index is outperforming Small Caps, which should attract buyers.
The index which is feeling the most pressure is the Russell 2000. The one support level that I thought would hold of the three indices, got nicked from the open. Adding to the pressure was the net bearish finish to its technicals, although the Russell 2000 is outperforming the Nasdaq. Given the index is staring into the abyss (next support is the October low), buyers could get aggressive at the open and look for a quick return above $175 ($IWM), but if the index can't close above this level on Monday then $162.50 is a calling.
Get a 50% discount on my Roth IRA with a 14-day free trial. Use coupon code fallondpicks at Get My Trades to get the discount.
---
Investments are held in a pension fund on a buy-and-hold strategy.
